IoT connected services changing business models

• Companies are shifting toward connected services, transforming their business and engagement models.
• Leveraging an IoT-driven connected services ecosystem model will help deliver customer-centric services through digitally integrated platforms.
• This helps enterprises differentiate themselves in the market, make internal processes more efficient, and drive new value streams and business models in a sustainable way.

Enabling IoT-driven connected services

Companies are increasingly adopting a service-based model, where customers pay for the complete solution including support services instead of just the product itself. Rather than just selling products, this service-focused approach, termed servitization, not only enables new business and engagement models but also creates new customer experiences that focus on outcomes and value. Take, for instance, the following connected services that are enabled with IoT:?

• An aerospace original equipment manufacturer (OEM) charges for productive flying time of airlines instead of just selling aircraft engines.?
• Major tire manufacturers are charging car fleet operators based on distance driven rather than just selling tires.
• An entertainment company gives visitors a special band that can be used as a hotel key, ticket, and for payments.?
• A high-tech major focus on providing document solutions and managing printed services than just selling copiers.
• Utility providers are transitioning to a low-carbon, decentralized energy value ecosystem to deliver superior customer experiences.
• Telecom service providers are leveraging geographic information systems to improve operational performance, enhance customer experience, and meet regulatory requirements.

Companies can collect and analyze data from IoT-enabled products, assets, and processes. This not only helps them enhance customer experiences with improved products and services, but also generates new revenue and improves efficiency of operations and maintenance.

ECOSYSTEM MODEL

Ushering in an era where everything and everyone is becoming connected

Rapid advances in 5G, IoT, artificial intelligence (AI), multi-cloud and edge computing make connected ecosystems a reality. This is leading to the characterization of products not just by their physical appearance, but also by how they can provide sustainable value, allowing businesses to differentiate their offerings accordingly and drive growth.

Although big data, analytics, and Al will underpin servitization and transformation of customer experiences, IoT-based connected services will drive this change.?

To embrace this change, enterprises need to leverage the connected services ecosystem model comprising of industry verticals, regulatory bodies, technology and solution providers, platform enablers, and customers. This will help enterprises benefit from the economies of scale and deliver customer-centric services through digitally integrated platforms that combine the offerings of multiple partners, and even competition. Though this might seem risky from a traditional business perspective, the gains realized through this connected ecosystem will be the determining factor for the business transformation.

ROLE OF IOT

Taking a future-focused look at how IoT can be used for connected services across industries

IoT-based connected services are disruptive and are changing the way we live and work. Not surprisingly, many industries are keen to tap into the opportunities and are investing in IoT.

Utilities

The industry is shifting toward renewable fuels, electrification, and distributed energy generation. Energy consumers are becoming prosumers, blurring the boundaries of traditional roles. While decarbonization led by renewable sources allows sustainable, flexible, and autonomous power generation, decentralization gives rise to heavily distributed power systems as distributed energy sources like solar and electric vehicles proliferate.?

Moreover, changing regulations have led to electricity wholesale markets that allow energy to be produced in one location and supplied to consumers in other locations, giving rise to competition and democratization in the energy market. Furthermore, digitalization enables real-time data on energy generation, transmission, distribution, and consumption at various points in the grid. Market, environmental, and regulatory forces have made reliable, secure, and efficient smart grids essential for utilities companies.?

With digital technologies, they can move to a low-carbon, decentralized energy value ecosystem and reinvent themselves for a sustainable future. Technological advances in renewable energy generation, innovation in storage systems, IoT, AI, and distributed ledgers in blockchain, combined with geographic information systems, spatial mapping, and location-based services, can speed up this energy transition.

Transportation and logistics

The demand for faster delivery of goods and services is stretching resources and increasing the complexity of supply chain management. Dynamic business situations, resource availability, regulatory requirements, and sustainability targets are challenging supply chain and logistics planning and operations.?

With IoT-powered cognitive technologies, organizations can proactively navigate diverse fleet and freight disruptions, while balancing costs and improving profitability. Automation of inbound and outbound logistics can optimize trips and fleet utilization and improve driver behavior. Meanwhile, inventory and workflow automation can improve asset health and reduce maintenance.

Retail

With advanced technologies, customer transactions in retail have significantly changed over the past years. Omnichannel, enhanced customer experiences, and time-bound deliveries are reshaping the world of retail. Retailers are focused on accelerating their supply chain transformation and making their in-store experience more relevant to customers. They are also rethinking their business models to integrate brick-and-mortar stores with online operations, offering customers the best of both worlds.??

Retailers can adopt smart and connected technologies such as radio frequency identification, computer vision, smart cards, smart kiosks, mobile applications, automated payment, IoT, augmented, virtual, and mixed reality, beacons, and location intelligence. These can help address merchandizing, store, and supply chain requirements in their retail business. Moreover, they can leverage connected services to reimagine store operations, optimize operational costs, improve productivity, and enhance customer experiences.

High tech

Evolving consumer needs, regulations, and sustainability targets are pushing high-tech OEMs to be connected, collaborative, and cognitive. They also need increased visibility of their products across the value chain from sourcing to consumption and even to extension of the end of life of products with recycling. This paradigm shift in business strategies is pushing them to adopt digital, IoT, and connected technologies. It also enables servitization, creating value for customers while unlocking new revenue streams.

True enough, connected products and services offer a seamless customer experience. But when combined with a customer-centric approach, it can be the differentiating factor for organizations in the market. Moreover, it can enhance customer satisfaction, foster loyalty, improve operational efficiency, and drive long-term growth.

Smart cities

With rapid urbanization, many countries are developing smart city strategies that enable local area development and harness next gen technologies to drive economic growth and improve public services. Smart cities not only improve the quality of life but also offer better employment opportunities for citizens through digital platforms.?

A suite of smart city solutions that leverage data from multiple domains, systems, and IoT devices in a common digital platform can achieve new contextual and cross-organization operational insights to minimize utilities downtime, reduce costs, and improve services.

Healthcare

We’re seeing a manifold increase in healthcare services enabled by IoT. Take, for instance, those that allow patients to access remote medical assistance through smart?mobile applications. In the coming years, innovations in personalized healthcare and digital surgery platforms, connected ambulances, telehealth and teleconsultation, hospital at home, medical imaging, connected medical instruments and associated analytics will play a major role. Healthcare ecosystems of the future powered by IoT connected device platforms will be patient-centric, seamlessly connecting hospitals, physicians, and patients.

GETTING STARTED

Exploring IoT-led connected services and solutions

IoT-led connected services and solutions create opportunities. They help enterprises differentiate themselves in the market, make their internal processes more efficient, and drive new value streams and business models sustainably. While connected services can bring in many transformational benefits, many businesses are still grappling with how IoT applications can reach the scale required to maximize ROI. The challenge enterprises face in adopting IoT-based connected services is not technical but mostly deals with finding business value quickly.?

As a part of strategy development, enterprises should first define their vision for IoT, both short-term and long-term. This means answering questions such as:

• What critical business problems need to be solved? For example, is it about cutting costs or growing revenue through new services and business models?
• How much value can be potentially gained by investing in IoT to solve those problems??
• How can enhanced customer experience and satisfaction be enabled by value-added services??
• What innovative, customer-centric engagement models can be quickly enabled?

With a defined vision and strategy in place, enterprises can arrive at optimal high potential business use cases with immediate ROI that combines higher benefits with a shorter payback time. By focusing on these use cases, organizations can drive greater value from their IoT investments and secure a competitive advantage.?

After this, enterprises can develop a minimum viable prototype of select use cases, helping innovate and differentiate products and services. With the insights gained, enterprises can develop new products and features that can improve customer experience and strengthen relationships. Once the business value and performance are proven, the products and services can be easily and reliably scaled, leveraging IoT-enabled platform-as-a-service.

BENEFITS

How companies can innovate with connected services for a greater competitive advantage

IoT-led connected services create new opportunities and help in expanding business models for recurring revenue and sustained profitability. It adds value at every step of the customer journey, enhancing customer experience. Moreover, greater collaboration in the connected services ecosystem increases agility, improves competitiveness, and helps seamlessly scale solutions and applications.

What’s more, it creates differentiated servitization opportunities, enabling organizations to reimagine how they attract, serve, and retain customers. For this, they need to create digital connected solutions supported by a future-proof reference architecture and the right technology stack, leveraging the connected services ecosystem for stability, scalability, and faster realization of business value.

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Disclaimer: All views expressed in this article are my own and do not represent the opinions or views of my current employer or any entity whatsoever with which I have been, am now, or will be affiliated. This post is for?informational purposes only and any advice should be followed at the reader's own discretion.

?2023 by Mrinmoy Paul

Source: tcs.com